China’s long march towards global financial integration appeared to take a step sideways with the recent decision by MSCI to postpone including domestic A-shares in its family of global equity indices. The pause will allow for some regulatory plumbing and access fixes, and in no way derails China’s increasing influence in global financial markets.

The renminbi is now the fifth-largest currency in global payments, according to financial telecoms provider Swift. The board of the International Monetary Fund will determine this autumn whether the renminbi is ready to be included in the fund’s special drawing rights line-up. Other Asian countries already hold the renminbi in their foreign exchange reserves.

Less obviously, Chinese bonds are taking an increasing role in global bond portfolios. Although only in infancy – the entire exposure of foreigners via offshore and onshore access is maybe $250 billion – China is already a part of indices tracked by foreign investors with weights of 4% to 7%, depending on the category.

These markets will grow. Beijing is running fiscal deficits. Plans to overhaul social spending and restructure debt run up in the post-2008 binge by local governments and corporations involve bond issuance.

China’s need to develop funded savings and welfare for its ageing population calls for more development of bond markets to provide assets to hold against these long-term claims. Private companies need secure long-term finance for capital expenditure plans.

Assuming parallel changes in foreign access to these markets, China could easily be 10% to 15% of emerging market benchmarks available to foreign investors by 2020.

The market is big already. BNP Paribas estimates that China has the third-largest tradable debt stock in the world, at some $6.5 billion. This is larger than traditional issuers such as France, Italy and the UK, and is only surpassed by Japan, at $12 billion, and the United States, at $35 billion.

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Official debt is around 60% of the total, private sector the rapidly growing remainder. These shares may reverse over the next five years with a persistent fiscal deficit, which could exceed 3% of GDP. Assuming nominal GDP growth of 7% per annum over the next five years and continuing corporate demand, a market size of over $10 trillion by the end of this decade is within reach.

Will this market growth translate into greater opportunity for non-Chinese investors? Probably. Consider the following.

First, China has an interest in settling trade in its own currency, one that is stable and easily accepted.

Second, China and Chinese companies have an interest in diversifying funding sources away from their overburdened and often overlent domestic banks.

Third, China has a long-held political ambition to play a greater role in world affairs, including financial structures, as seen in its support for the new, non-American, Asian Infrastructure Investment Bank.

Finally, growing corporate and municipal bond markets reduce funding costs and systemic risk. Taken together with a long-term commitment to opening up capital and current accounts, this suggests gradual increases in foreign access to their growing bond markets.

No one should expect an overnight transition – questions of access and legal rights are every bit as important for bond investors as for equity investors. There is wood to be chopped in risk assessment, information availability, credit history and bankruptcy rights, to name just a few of the many challenges.

Make no mistake though – demand exists. Foreign bond investors have taken up their full quota of available onshore capacity, unlike equity investors where take-up is only 50%.

This makes sense – there are few A-rated investors of size in emerging market debt. A new China as a major destination for global bond investors lies not far ahead.

Ewen Cameron Watt is global chief investment strategist at BlackRock

This article was first published in the print edition of Financial News dated June 29, 2015